Government could grant low interest loans to grain units to boost ethanol production

To boost ethanol production in the country, the government plans to expand subsidized loans to grain-based distilleries also under the ongoing program, according to government sources.

The sources said the Oil and Food Ministries believe that ethanol production cannot depend on a single raw material, namely sugar cane, to meet the 20% target. of blending ethanol with gasoline by 2030.

There is a need to look at other agricultural raw materials such as rice, corn, sorghum and barley to make ethanol. After several rounds of discussions, the two ministries are in favor of extending low-interest loans to grain distilleries also under the ongoing program, the sources said.

As part of an incentive program announced in June 2018, the Center had approved reduced rate loans for sugar factories to create new or modernize existing distilleries, increase their capacities and encourage them to divert sugar cane towards the manufacture of ethanol.

Under this program, the government has twice extended the interest subsidy of Rs 4,600 crore for a loan amount of Rs 22,000 crore.

A proposal to change the existing regime to include grain-based distilleries would require Cabinet approval, whose preparations are underway, the sources said and added that funds unused under the current regime will be used for this purpose. end.

The sources also mentioned that the grain-based distilleries association claims it currently has a capacity of 75 crore liters for making ethanol. Petroleum marketing companies have put out tenders to buy grain-based ethanol from them.

When the program was launched in 2018, sources said the government approved subsidized loans to sugar factories to increase about 195 million liters of ethanol capacity. Of which a capacity of 101 crore liters is available for use now and the balance will be ready by 2022.

In September-October this year, the government received around 400 applications for sweets for the installation of a 400 crore liter capacity of ethanol on a low rate loan facility under the program. Applications are currently under review.

As a result of improved ethanol capacities and a good harvest of sugarcane, the government estimated that over 300 crore liters plus ethanol would be available for blending in 2020-2021, far more than 180 crore liters in 2019-20.

Currently India has a total capacity of 426 liters of ethanol, of which a capacity of around 130 crore liters is used to make other products such as portable alcoholic beverages and disinfectants. The rest is available for making ethanol.

With an expected increase in ethanol supply this year, the government hopes to meet the target of 10% ethanol blending in 2020-2021.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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